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EIASM'17: Day two summary

9/11/2017

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The 14th edition of the Corporate Governance Workshop convened by the European Institute of Advanced Studies in Management (EIASM) was held in Brussels, Belgium this week. A summary of the key insights from the second day follows below (click here to read the day one summary).
  • Messrs Bob Garratt (world-class governance thinker and practitioner), W. Lee Howell (World Economic Forum) and Thomas Donaldson (Wharton Business School, Philadelphia) opened the second day with a shared keynote. There were so many insights from this session that I've reported them separately.
  • Gerrit Sarens (KU, Leuven and Belgian company director) summarised findings from a lengthy study, a critical evaluation of the role of the board of directors in crisis detection and response. Informed by the analysis of 17 cases, Sarens observed that boards often fail to discern the onset of a crisis: they were quick to discern and act on an emergent crisis in just three of the 17 cases studied. This blindness (the board did not detect the onset of a crisis in 14 of the 17 cases studied) prompts some rather awkward question: why? While each case was different, Sarens noticed a consistent pattern of behaviour and practice across the 14 boards including hubris and overconfidence; low levels of board–management transparency; lack of critical attitude and genuine independence, appropriate expertise and relevant knowledge; and, tellingly, a low level of commitment.
  • Most of the other papers and presentations on the second day were reductivist studies of board and director attributes: detailed statistical analyses of typically quantitative data collected from public sources and databases. Sadly these studies added little to what is already known: that the structure and composition of board is, largely, immaterial to effective board practice and business performance. During the afternoon session, one colleague made a particularly telling observation: "I'm getting frustrated. The dominant theme of board research needs to change, from searching for regular patterns of what boards should look like, to understanding and explaining the contextually relevant (and contingent) relationship between boards and business performance". I've been beating a similar drum for a while now: if we are to understand how boards contribute to business performance (read: fulfil the value creation mandate), then researchers need to get inside the boardrooms of successful companies to see what those boards actually do and don't do.
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Dr. ​Peter Crow, CMInstD
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